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QUALCOMM, Inc. (QCOM), athenahealth, Inc (ATHN): Is WebMD Health Corp. (WBMD) Destined for Greatness?

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Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does WebMD Health Corp. (NASDAQ:WBMD) fit the bill? Let’s take a look at what its recent results tell us about its potential for future gains.

QUALCOMM, Inc.

What we’re looking for
The graphs you’re about to see tell WebMD Health Corp. (NASDAQ:WBMD)’s story, and we’ll be grading the quality of that story in several ways:

Growth: Are profits, margins, and free cash flow all increasing?

Valuation: Is share price growing in line with earnings per share?

Opportunities: Is return on equity increasing while debt to equity declines?

Dividends: Are dividends consistently growing in a sustainable way?

What the numbers tell you
Now, let’s take a look at WebMD Health Corp. (NASDAQ:WBMD)’s key statistics:

WBMD Total Return Price Chart

WBMD Total Return Price data by YCharts.

Passing Criteria 3-Year* Change Grade
Revenue growth > 30% 1.7% Fail
Improving profit margin (104.4%) Fail
Free cash flow growth > Net income growth (41.8%) vs. (104.5%) Pass
Improving EPS (105.3%) Fail
Stock growth (+ 15%) < EPS growth (31.2%) vs. (105.3%) Fail

Source: YCharts. * Period begins at end of Q2 2010.

WBMD Return on Equity Chart

WBMD Return on Equity data by YCharts.

Passing Criteria 3-Year* Change Grade
Improving return on equity (105.7%) Fail
Declining debt to equity 883.6% Fail

Source: YCharts. * Period begins at end of Q2 2010.

How we got here and where we’re going
Things don’t look good for WebMD Health Corp. (NASDAQ:WBMD) today. The health information services provider earns only one out of seven passing grades, and even that single pass was granted more on a technicality than because of a genuine improvement. Can WebMD push past all of the problems of its recent past and give investors a bit of good news, for once? Let’s dig a little deeper to find out.

WebMD Health Corp. (NASDAQ:WBMD) has recently entered into a partnership with chip giant QUALCOMM, Inc. (NASDAQ:QCOM) for the expansion of its product portfolio. The new offerings focus on integrating digital health apps with third-party devices. This new avenue of tech-enhanced health care ought to support WebMD Health Corp. (NASDAQ:WBMD)’s growth in the near future, but the sustainability of that growth is far from a sure thing. Fool contributor Keith Speights notes that a number of other companies have also started building up their telemedicine capabilities using QUALCOMM, Inc. (NASDAQ:QCOM)’s technology platform.

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